The DRAM and HBM supply crunch

DRAM contract prices rose roughly 80% in Q2 and 40% in Q3, with another 20% increase projected for Q4, and memory executives at Micron and Samsung warn that demand will exceed supply through at least 2028. Micron CEO Sanjay Mehrotra said new clean rooms planned for 2028 will ramp production only gradually, that the transition from HBM3E to HBM4 and HBM4E creates additional supply headwinds, and that future node transitions yield less productivity per wafer than past generations. Prices for memory sold in 2027 are already set higher than 2026 prices, Mehrotra said. Samsung executives have issued similar warnings about supply remaining constrained through at least 2028. Bernstein argues the apparent Q4 deceleration is misleading: long-term supply agreements covering roughly 40% of the market mean a 30% spot-price move registers as only about 18% in reported aggregate prices, and a 15-20% quarterly jump would still rank among the strongest moves in the past 15 years. Customers are paying large upfront deposits to lock in supply, with Sandisk holding $16.5 billion and Micron approximately $32 billion in deposits against contracted revenue. The shortage is reshaping Nvidia's hardware plans. Silicon Analysts reported Nvidia is actively testing at least three downgraded HBM configurations for its Rubin Ultra GPU, including reductions from the originally planned 16-stack HBM4E down to 12-stack and 8-stack variants, described as a direct response to the structural HBM supply crunch. Micron entered high-volume production of a 36 GB, 12-layer HBM4 stack for Vera Rubin at speeds above 11 Gb/s per pin and over 2.8 TB/s bandwidth, though that represents standard HBM4 rather than the customized HBM4E called for in the original Rubin Ultra design. Nvidia may pivot to rack-level scaling to compensate for reduced per-GPU memory, with Rubin Ultra system options spanning NVL72, NVL144, and NVL576 configurations; the largest planned domain would connect eight racks and 576 GPUs. The shortage has spread beyond DRAM and HBM. Lead times for some Samsung Electro-Mechanics MLCCs have stretched to 61 weeks, with an AI server using more than 10 times as many MLCCs as a regular server, and the tightness has spread into consumer, automotive, and industrial products. Samsung Electro-Mechanics is expected to post Q3 operating profit growth of 148% year over year to 645 billion won. The company signed a 360.5 billion won contract for package substrates for memory semiconductors covering all of 2027, described by Korean media as its largest substrate contract and its first long-term deal specifically for package substrates, bringing its 2026 total to roughly 4.3 trillion won across seven long-term agreements. Taiwan's ESMT reports the niche memory market is undersupplied by more than 30% and expects tightness to persist into 2028 or longer. Global smartphone shipments could fall approximately 20% this year due to memory shortages. Lam Research raised its advanced packaging revenue outlook from greater than 40% to greater than 70%.